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Prices of cotton seed oilcake slide

Prices of cotton seed oilcake has been trending lower over the past couple of months. Traded on the National Commodity & Derivatives Exchange Limited (NCDEX), the by-product of kapas (raw cotton) peaked at Rs. 2,791 per quintal in July and has since fallen by a steep 28-odd per cent to Rs. 2,012 per quintal now.

Expectations of higher production of cotton this year led to a sharp fall in prices over the past couple of months. From here on, while prices may not correct sharply, they are likely to remain under pressure in the near term. Kapas is unginned cotton or the white fibrous substance covering the seed, obtained from the cotton plant. Upon ginning, the lint (about one-third in weight) and the seed (two-thirds in weight) get separated.

While lint becomes the raw material for cotton yarn or thread, the seed is crushed for extraction of oil. The by-product which remains after extraction of oil is called cotton seed oilcake, which is mainly used as cattle feed. The cotton seed oil recovery is around 12 per cent while the oilcake forms 86 to 88 per cent.